Costa Rica Seizes Cash From Man Who Could Not Prove Its Origin

Government seizes ¢300 million colones (US$600.000 dollars) from citizen who could not justify the origin of the funds

The Juzgado Contencioso Administrativo y Civil de Hacienda (Administrative Court), in Goicoechea, ruled in favour of the Fiscalía (prosecution) against a man named Soto, and ordering that ¢77 million colones and US$487.500 dollars (¢238 million colones) pass to the State, because the man was “unable to justify” the increase in his financial worth.

This is the first sentence for “capitales emergentes” (emerging capital), applying the tools of administrative law by government to pursue funds that has no lawful justification, even when criminal proceedings have not been able to establish with certainty that the funds were acquired illicitly.

The Soto case started back in June 2011 when the Fiscalia filed a complaint against Soto, a lottery vendor and resident of Hatillo on the south side of San José. Immediately the Juzgado Contencioso ordered Soto’s funds frozen, which were held in two accounts at a state bank.

The Ley contra la Delincuencia Organizada (Organized Crime Act) of 2009, authorizes the Attorney General and three other state institutions to act in cases of suspicion. According to Article 20, the Attorney General, the Instituto Costarricense sobre Drogas (ICD), the Minsiterio de Hacienda (Ministry of Finance) and the Contraloría General de la República (Comptroller’s office), can file “complaints” for “capitales emergentes”.

The Soto case was initially handled by the Fiscalía Adjunta de Delitos Económicos (Deputy Prosecutor for Financial Crimes) alleging money laundering. However, despite intense investigations that included the Financial Intelligence Unit of the ICD, it was not possible to determine if money laundering had taken place.

Costa Rica’s laws provides that, to prove the offence of money laundering, a crime must be established, for example, fraud, tax evasion and drug trafficking, among others. The Soto case was closed without proving any crime was committed.

The case was stalled unitl May 2013, due to several filings with the Constitutional Court by the Juzgado Contencioso Administrativo .

On July 9 said Juzgado Contencioso Administrativo ordered a forfeiture of the money in favour of the Instituto Costarricense sobre Drogas (ICD).

The Attorney General, Jorge Chavarria, said regarding money laundering, it is difficult here and globally, to establish criminal liability where the action is bound to prove the predicate offense, thus it is important to design new mechanisms to combat money laundering like the use of tools of administrative law, as was applied in this case.

“The tool has great relevance for addressing money laundering because, although there is no imprisonment, there is loss of all goods unrelated to legitimate sources,” said the Chavarria.

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